KUALA LUMPUR: Khazanah Nasional Bhd, in the first full year of its refreshed mandate, reported a turnaround in overall performance for 2019 with record profits from operations contributed by higher divestment gains and lower impairments, and robust portfolio returns.
It achieved profit of RM7.36 billion last year, compared to a loss from operations of RM6.27 billion in 2018.
Gains on divestments increased to RM9.9 billion compared to RM1.4 billion, while impairments were at RM4.9 billion, down from RM7.3 billion the previous year.
The strategic fund also declared a dividend of RM1.0 billion for 2019 while strengthening its financial position with expenses reduced by 28.2% to RM484 million, compared to RM674 million in 2018.
This equates to 35 basis points (bps) as a percentage of assets, compared to 50bps the previous year.
“Our 2019 performance was achieved against a backdrop of uncertainties in the global landscape, which saw a prolonged Brexit process as well as the heightening of the US-China trade war,” Khazanah Managing Director Shahril Ridza Ridzuan said in a statement today.
“This was made more challenging by the continued low returns environment and generally slower economic growth. Despite these challenges, we managed to achieve significant progress in delivering on our mandate to grow Malaysia’s long-term wealth.”
He said one year into its portfolio rebalancing exercise, Khazanah has progressed significantly towards diversifying the commercial fund under the refreshed mandate and is well positioned to increase its investment activities in 2020.
The strategic fund achieved financial and strategic outcomes for specific assets despite the sluggish market in 2019.
Khazanah conducted regular engagements with the government to enhance the regulatory landscape, refreshed and strengthened the leadership bench at investee companies, and commenced restructuring initiatives to improve financial performance and unlock value.
Looking ahead, Shahril said this year will be particularly challenging as an already uncertain global economy is harmed by the ongoing Covid-19 spread.
“While our government’s stimulus package is a welcome response, we nevertheless are preparing for a period of global economic slowdown,” he said.
“The current uncertainties will affect countries and companies alike. Nevertheless, we are comfortable that our diversified portfolio and strategies are robust while accepting that it will be extremely difficult to achieve the same levels of success as 2019.”
Khazanah, he said, would continue to focus on further diversifying the commercial fund, while working with the government to enhance relevant regulatory frameworks; embedding environment, social and governance considerations across all investment activities; and engaging investee companies on value creation initiatives.